Bell Brothers Has $3,000,000 in Sales

question 37

Multiple Choice

Bell Brothers has $3,000,000 in sales. Fixed costs are estimated to be $100,000 and variable costs are equal to 50% of sales. The company has $1,000,000 in debt outstanding at a before-tax cost of 10%. If Bell Brothers' sales were to increase by 20%, how much of a percentage increase would you expect in the company's net income?

• A) 20.83%
• B) 19.79%
• C) 21.92%
• D) 23.08%
• E) 18.80%

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Definitions:

Relatively More

A comparative term indicating a greater amount, number, or degree in comparison to another or others.

Electronegativity

A measure of the tendency of an atom to attract a bonding pair of electrons.

Periodic Table

A tabular arrangement of chemical elements organized by their atomic number, electron configuration, and recurring chemical properties.

Polar Covalent Bond

A type of chemical bond where a pair of electrons is unequally shared between two atoms, resulting in a distribution of charge.